Table 7.10: Requirements for surrendering a self-insurance licence and penalties for exiting the scheme

s403, s404, s405, s406, s407 and s408 — Workplace Injury Rehabilitation and Compensation Act 2013

Application:

• At the request of the self-insurer or determined by WorkSafe Victoria (WSV), the self-insurer’s approval may be revoked.

Tail claims liability:

• Unless otherwise allowed by WSV, WSV assumes the liability for and responsibility for management of the tail claims of the former self-insurer. A settlement payment covering the outstanding tail claims liability is payable by the former self-insurer to WSV.

Actuarial Assessment:

• An annual actuarial assessment is undertaken for a period of 6 years following the self-insurer’s approval being revoked. The actuarial assessment is undertaken by an actuary appointed by WSV.
• An adjustment for the settlement payment is undertaken at the 3rd and 6th year following the date the self-insurer’s approval is revoked.
• If the revised assessment at the end of the third year exceeds the initial assessment, the former self-insurer must pay the difference to WSV. If the revised assessment is less than the initial assessment, WSV must pay the difference to the former self-insurer.
• This process is repeated at the end of the 6 year liability period and if the revised assessment exceeds the assessment at the end of the third year, the former self-insurer must pay the difference to WSV. If the revised assessment is less, WSV must pay the difference to the former self-insurer.

Tail claims:

• The former self-insurer must ensure all claims are given to WSV and all new claims are lodged with WSV.

Other charges:

• The former self-insurer is liable to pay the cost of the actuarial assessments obtained by WSV and any extra assessment, if the former self-insurer disputes WSV’s assessment.
• The former self-insurer must hold a guarantee against insolvency risk and claims deterioration until the final assessment of liability and, if applicable, payment for the 6-year adjustment.

Time for settlement payment:

• Payment for the tail claims liability and the 3rd/6th year adjustments (if applicable) is payable within 28 days of the assessment or determination from WSV or for a further period as may be agreed between WSV and the employer.

Specific review provisions:

• The former self-insurer may appoint its own actuary to review WSV’s final assessment of liability. Ability to seek judicial review at common law and actions under the Administrative Law Act 1978 are excluded.

Outstanding payment:

• Failure to pay any outstanding liability amount may be recovered by WSV under the guarantee in force.

Part 9 — WIRC Act

Application:

• Victorian scheme-insured or self-insured employers that exit the scheme to become licensed under the Comcare scheme. Applies from 1 July 2005 onwards.

Tail claims liability:

• WSV assumes the liability for and responsibility for management of, the tail claims of the exiting employer. A settlement payment covering the outstanding tail claims liability may be payable by the exiting employer to WSV.

Actuarial Assessment:

• An annual actuarial assessment is undertaken for a period of 6 years following the employer’s exit. The actuarial assessment is undertaken by an actuary appointed by WSV.
• An adjustment for the settlement payment is undertaken at the 3rd/6th year following the date the employer exited the Victorian scheme.
• If the revised assessment at the end of the third year exceeds the initial assessment, the exiting employer must pay the difference to WSV. If the revised assessment is less than the initial assessment, WSV must pay the difference to the exiting employer.
• This process is repeated at the end of the 6 year liability period and if the revised assessment exceeds the assessment at the end of the third year, the exiting employer must pay the difference to WSV. If the revised assessment is less, WSV must pay the difference to the exiting employer.

Other charges:

• The exiting employer is liable to pay the cost of the actuarial assessments obtained by WSV and any extra assessment, if the employer disputes WSV’s assessment.
• The exiting employer must hold a guarantee against insolvency risk and claims deterioration until the final assessment of liability and if applicable, payment for the 6- year adjustment.

Time for settlement payment:

• Payment for the tail claims liability and the 3rd/6th year adjustments (if applicable) is payable within 28 days of the assessment or determination from WSV or for a further period as may be agreed between WSV and the exiting employer.

Specific review provisions:

• The exiting employer may appoint its own actuary to review WSV’s final assessment of liability. Ability to seek judicial review at common law and actions under the Administrative Law Act 1978 are excluded.

Outstanding payment: 

• Failure to pay any outstanding liability amount may be recovered by WSV under the guarantee in force.

Penalties applied for failure to comply with a provision under Part 9 of the WIRC Act are:

• in the case of a natural person, 240 penalty units;
• in the case of a body corporate, 1,200 penalty units.

Workers’ Compensation and Rehabilitation Act 2003 — s105B.

• Application: Solely to former self-insurers who join the Comcare scheme.
• Tail claims: The employer’s State licence continues for 12 months after exit and they retain liability for tail claims. After 12 months, WorkCover takes over responsibility for pre-exit tail claims and seeks contribution from employer or authorises the employer to continue to manage and pay for these claims.
• Extra charges: Levy fee for 12 months, share of actuary charges, and share of any arbiter costs.
• Time for payment: Interim payment 12 months after exit date needs to be made within 20 business days of receiving written assessment from WorkCover (s105I).
• 4 years following licence cancellation, WorkCover and the employer must each appoint an actuary to recalculate the amount of liability. The employer must pay WorkCover the difference between the interim payment and the recalculation amount, plus interest on the difference from the day the whole of the interim payment was made.
• Specific  review provisions: If WorkCover and the employer cannot agree on the recalculated amount they may refer to an arbiter.
• Penalties: No penalties specified for late payment.

Assumption of liabilities

Pursuant to s167 of the Return to Work Act 2014, ReturnToWorkSA is the insurer of last resort and must undertake the liabilities of any self-insured employer that ceases to be registered as a self-insured employer. ReturnToWorkSA may at its sole discretion delay the undertaking of liabilities for such period as it deems appropriate.

Where ReturnToWorkSA assumes the liabilities of a self-insured employer, either in whole or part, it is entitled to receive a payment from the employer equal to the capitalised value of all outstanding liabilities multiplied by that same prudential margin applied on calculating financial guarantees. ReturnToWorkSA may recover the amount of liabilities undertaken by ReturnToWorkSA either as a debt due to ReturnToWorkSA or as a claim — s167(3), reg 62 and 8.6 Code of conduct for self-insured employers

Payment

ReturnToWorkSA may, at its discretion, give a self-insured employer whose registration is ceasing a choice as to whether to pay the capitalised sum from its own resources, or to have the financial guarantee provided during the period of self-insured employer registration paid to ReturnToWorkSA. Any shortfall in the financial guarantee relative to the assessed value of the liabilities will be payable by the employer to ReturnToWorkSA as a debt.

Run off of claims

Where ReturnToWorkSA deems a run off to be appropriate or necessary in the circumstances, ReturnToWorkSA may also determine that the former self-insured employer continues to exercise some or all of its delegated powers and discretions. Without limitation, ReturnToWorkSA will ordinarily consider the following circumstances as being suitable circumstances in which to allow the former self-insured employer to run off its claims:

1. Employers that have substantially reduced their workforce but which have performed their self-insured employer duties and obligations in accordance with the requirements of the Act and its term and conditions of registration.
2. A subsidiary of a self-insured employer is sold and the subsidiary or the self-insured employer has sufficient resources and financial security to run off its claims.
3. An employer closes down its operations in the state, but remains a viable company operating interstate.

ReturnToWorkSA will evaluate the former self-insured employer’s compliance with the Act, WHS Standards and Injury Management Standards and the agreement referred to in clause 8.8 and may terminate the run off if ReturnToWorkSA considers there are substantive grounds for doing so.

Upon cessation of the run off period, ReturnToWorkSA will appoint an Actuary to assess the value of the claims existing at that time in order to calculate the capitalised sum (if any) the employer must pay to ReturnToWorkSA.

Agreement

In circumstances where ReturnToWorkSA has decided not to delay the undertaking all of the liabilities of the former self-insured employer and to continue the delegation of powers and discretions to the former self-insured employer for a period, ReturnToWorkSA may require the former self-insured employer to enter into an agreement with ReturnToWorkSA.

A licensee may request the Commission to revoke its licence at a date from which it no longer wishes to hold such a licence under s107 Safety, Rehabilitation and Compensation Act 1988.. 

Regulation 21 of the Safety, Rehabilitation and Compensation Regulation 2019 outlines the consequences if a licence is revoked under s107 of the Act. 

Liability

1. the former licensed authority ceases to be liable under the Act for payments in respect of any injury, loss or damage suffered by, or death of, an employee occurring on or after the day when the licence is revoked; and
2. the former licensed authority remains liable under the Act for payments in respect of injury, loss or damage suffered by, or the death of, an employee occurring before the final licence was revoked; and
3. Comcare may discharge a liability mentioned in paragraph (b); and
4. the former licensed authority must pay to Comcare the full amount of any liability discharged by Comcare under paragraph (c), unless section 24 applies.

Claims management 

If the licence in force before revocation authorised the licensee to manage claims, Comcare will manage those claims and the former licensee must provide Comcare with all documentation and notices in respect of claims including notices of proceedings to Comcare. The Former licensee must also pay Comcare an amount determined by Comcare to be the costs incurred by Comcare in managing the claims. 

In accordance with regulation 24 of the Safety, Rehabilitation and Compensation Regulation 2019, Comcare may make a demand for payment under a guarantee that is in force in relation to the former licensed authority to:

• Discharge a liability for payments in respect of injury, loss or damage suffered by, or the death of an employee before the final licence was revoked.
• Meet costs associated with managing claims of the former licensed authority. 
• Reimburse itself if it has discharged liability or met a cost without using guarantee money.

Reimburse itself for costs of arranging for the employer functions of a former licensed authority to be performed by a person who be suitable to perform those functions under an agreement with Comcare.